Judgments can really cause a lot of problems when trying to get a mortgage. Most lenders will not extend credit to you if you have an unsatisfied judgment because they are worried that the judgment could ‘precede’ their loan’s lien position. Which basically means that if the house had to be foreclosed on, the judgment would be paid first. Even though some state laws will not allow this to happen, and even though FHA loans will allow mortgages to be written if the borrower has an unpaid judgment, most lenders will still not do the loan. They don’t want to take a chance and you cannot really blame them.
If you have an unsatisfied judgment you are probably going to have to ‘bite the bullet’ and get it taken care of. If it is possible for you to pay it off, you should make arrangements to do that. If there is no way you will ever get it paid off in this lifetime, you probably need to consider a bankruptcy if you ever hope to own a home in the near future.
If you think you can pay it off, contact the attorney who is handling the judgment. Negotiate with them. Even if you have enough money to pay the judgment in full, don’t show your ‘hand’ right away. Offer them half or less. See how they respond. Tell them that you have ‘$X’ and that is all you can afford to pay them and you are prepared to pay them as soon as you get something in writing from them that is proof of what they will accept. Don’t take their first offer. Don’t even make a deal with them on the first call. You have to play the game a little if you hope to get out of this situation paying as little as possible. You might have to call them a couple times over the period of a week. Each time offer a little more. They will probably come down on their figure a little more every time. Get something official from them in writing as soon as you accept their offer. Make sure they sign the offer. Also, make sure they give you something in writing that says they will file a satisfaction of judgment as soon as they get your payment and that they will mail you an official copy of the satisfaction. Then, make sure you do what you agreed to do right away. Don’t hesitate on this at all.
Once you have your satisfaction, you can get the judgment cleared up on your credit report by sending a credit dispute letter to the credit bureau reporting the judgment. When you send this letter, send a copy of the satisfaction of judgment with the letter. This will get cleared up in a matter of 30 – 60 days on your credit report.
But I already paid the judgment and it doesn’t report that way on my credit report!
If this is the case, you need to contact the attorney who handled the judgment. If you don’t know who that is, you can call the court house. They will have a record of who the attorney is and his/her contact info. Tell the attorney what you are facing. They probably never filed the satisfaction of judgment as they should have. This is a mess up on their part, but be polite. You will attract more flies with honey than you will with vinegar. Ask them if they would please file this right away and send you a copy of the satisfaction. If they will not, then you might have to go get it and file it yourself. Do it!
Once this paperwork has been filed, you must (like I described above) do a little self credit repair and send your credit dispute letters to the credit bureaus to get the item corrected. Don’t assume it will correct itself. It probably will over time, but it could be a long time.
But I already have a contract to buy a house, I paid the judgment a long time ago and I don’t have the time to wait 30- 60 days for this to get fixed.
Most likely, if you have proof you paid and proof of satisfaction, your loan officer will help you get your credit report corrected through a different means of credit repair called a ‘rapid re-score’. They have the ability to send this information quickly to their credit vendor and get the item corrected on your credit report so you can proceed with your loan.
Good luck!
